Americans bought fewer existing homes in September than the previous month, held back by higher mortgage rates and rising prices.BENGALURU | MUMBAI: Home buyers in big cities are increasingly opting for small studio or one-bedroom apartments on the outskirts as property prices continue to stay high, prompting several builders to focus on this segment.

"I opted for a smaller house for investment as this fits my budget and I got some discount from the builder," said Dinesh Ahuja, an IT professional who recently bought a 600 sq ft compact home in Bengaluru.

Developers say they are receiving good response to studio, 1-bedroom and 1.5 bedroom apartments ranging between 500 sq ft and 800 sq ft. "Affordability is a significant influence in a slower market, therefore this segment is relevant in the present scenario," said Ben Salmon, CEO at Assetz Property Group, a premium residential property developer. Assetz is launching a project in North Bengaluru conceptualised as an alternative to renting for young home buyers priced between Rs 25 lakh and Rs 50 lakh, ranging from 395 sq ft to 1,000 sq ft.

In Mumbai Metropolitan Region (MMR), too, the compact home strategy is working well for developers and homebuyers.

"We have been offering two or more than two choices to home buyers so that they can select the apartment that suits to their requirement and budget as well," said Shailesh Puranik, managing director at Puranik Builders. "This approach is working very well. We have been able to register good number of sales in current market conditions," he said.

As per property portal Magicbricks' PropIndex report, around 49% of homebuyers across the country are looking for options in the sub-Rs 60 lakh segment and within this budget range the share of consumer preference in the sub-Rs 50 lakh segment is 75%.

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A house for a proactive policy

We need proactive policy to boost affordable housing. Prefabricated buildings would shore up construction activity, bring down costs and improve housing supply. In tandem, we need to rationalise clearances and approvals for housing projects. Attendant infrastructure also needs stepping-up. We need to avoid rigid practices like a fixed, unchanging floor space index. Instead, modular investments should be planned to boost infrastructure and related services in our urban centres. It would raise housing capacity as well.